31 Mar 2020: UPSC Exam Comprehensive News Analysis

31 March 2020 CNA:- Download PDF Here

 
TABLE OF CONTENTS

A. GS 1 Related
B. GS 2 Related
POLITY AND GOVERNANCE
1. Why PM CARES, asks Cong.
C. GS 3 Related
ENVIRONMENT AND ECOLOGY
1. Cauvery and its tributaries look cleaner as pandemic puts a halt to pollution
ECONOMY
1. The cost of the lockdown is pegged at about $120 billion
2. NRIs can now invest in specified govt. bonds
D. GS 4 Related
E. Editorials
ECONOMY
1. A threat to food security
SOCIAL ISSUES
1. Short end of the stick
F. Prelims Facts
1. MCA to waive firms’ late filing charges
2. A novel air purifier to disinfect hospitals in COVID-19 fight
G. Tidbits
1. Rabi harvest to be affected for want of farm workers
2. SEBI relaxes debt default norms, raters can go easy
H. UPSC Prelims Practice Questions
I. UPSC Mains Practice Questions

Category: ECONOMY

1. The cost of the lockdown is pegged at about $120 billion

Context:

The complete 21-day COVID-19 shutdown of most economic activity has created new roadblocks, causing severe disruptive impact on both demand and supply side elements across sectors. The cost of the lockdown is pegged at around $120 billion (approximately ₹9 lakh crore) or 4% of the GDP.

Concerns:

  • 90% of India’s workforce is employed in the unorganised sector and this lockdown will effectively put over 45 million migrants living off daily earnings out of work.
  • Sectors like construction projects, mobility services, housekeeping and other informal sector employment will come to a sudden halt.
  • The manufacturing sector faces a triple challenge.
    • First, there are going to be serious supply chain disruptions not just when dealing with foreign parties, but also the domestic industry.
    • Second, sectors like automobiles, pharmaceuticals, electronics, chemical products, etc., are facing an imminent raw material and component shortage.
    • Third, the shutdown and resulting loss of revenue is certain to cause a number of bankruptcies and closures, especially in the MSME sector with corresponding disruption to supply chains.
  • On the demand side, several industries would get impacted starting with consumer durable goods and will cascade to other intermediate goods and basic goods.
  • The government was the major spender on investment in the infrastructure sector, which will slowdown now with resources and attention being diverted. Hence, industries like steel and cement, which did well last year, will stumble.
  • The services sector will see a fall in demand. These include aviation, hotels, restaurants, tourism, retail malls, etc. The real estate sector, which was already in deep trouble, could well slide even more, in the medium term at least.
  • Even 10-20% job losses among its 7.3 million employees in restaurants across the country would mean up to 15 lakh unemployed. Any delay in addressing the economic consequences will lead to massive job losses.

Southern India Chamber of Commerce & Industry (SICCI) suggests the following:

  • The Reserve Bank of India (RBI) has to address two problems:
    1. Transmission on rate cuts has been inadequate. Rate cuts by themselves are unlikely to stimulate demand as the primary cause for demand contraction will be on account of consumer confidence being low.
    2. SICCI feels that only the stronger firms in any sector can have the capacity to keep salary payments going, in the absence of any revenue earnings. Firms cannot be expected to drain their already stretched cash-flows. To tide over the present crisis, banks should give three months’ salary as overdraft facility to the employees of companies which can be escrowed to the companies with a nominal rate of interest not exceeding 3%.
  • The government could lend support through tax holidays and zero-interest loans for three months.
  • In the case of services sector, the government should consider contributing the employer’s share of PF for all employees earning less than ₹20,000 per month and ESI contribution for all employees earning below the statutory threshold level of ₹21,000 per month, for a period of 12 months.
  • For firms that have difficulties in managing their cash flows, the government should extend a government-backed loan guarantee, on the basis of which firms can raise loans on preferential terms to the extent of 25% of their existing working capital arrangements.
  • All rating agencies may be advised to suspend rating reviews till the lockdown is over.
  • The RBI needs to come up with a special window to provide liquidity to NBFCs and microfinance institutions in this period.
  • The government should ensure that all refunds across tax legislation — up to 75% should be given without any verification and any wrongful claim can be recovered without any interest.
  • Private sector hospitals need to be encouraged to provide specific number of isolation wards to the poor and extended financial assistance on soft terms.
  • Export incentive schemes like Sec. 10AA for SEZ units under the I-T Act should be extended up to March 31, 2021. Further, the recent Import Export Policy should be extended for one more year. In the absence of new Export/Import Policy, all export incentives viz. MEIS, SCIS, EPCG license, etc. should be extended for one more year. All charges including port charges, penal charges, demurrages should be waived. Further, all agencies viz. ports, air cargo terminals, all custodians of cargo and all shipping lines have to waive penal charges.
  • Fixed charges levied may be waived and the industry may be charged only on the actual consumption of electricity.
  • Immediate refund of IGST will help exporters in dealing with liquidity issues.
  • In order to have Business Continuity Plans where the economy is better prepared for a work from home mode, the government should halve GST rates on all laptops, routers, cloud services, dongles and such other equipment and services.
  • All companies should be asked to devote their CSR funds exclusively towards the creation of clean quarantine centres, and addition of hospital beds, ventilators and PPEs, besides investing in testing and other facilities aimed at preventing the spread of the virus. High Net-worth Individuals should be encouraged to do likewise.
  • Women’s Self-Help Groups and the informal sector should be asked to produce masks, hand sanitisers, among others in a big way.
  • Banks should be asked to fund these activities and State governments should arrange for the marketing of these products to their local primary health centres.

2. NRIs can now invest in specified govt. bonds

Context:

The Reserve Bank of India (RBI) has introduced a separate channel, namely ‘Fully Accessible Route’ (FAR), to enable non-residents to invest in specified government bonds with effect from April 1, 2020.

Details:

  • The move follows the Union Budget announcement that certain specified categories of government bonds would be opened fully for non-resident investors without any restrictions.
  • Eligible investors can invest in specified government securities without being subject to any investment ceilings.
  • This scheme shall operate along with the two existing routes, viz., the Medium Term Framework (MTF) and the Voluntary Retention Route (VRR).

Significance:

  • This will substantially ease access of non-residents to Indian government securities markets and facilitate inclusion in global bond indices.
  • This would facilitate inflow of stable foreign investment in government bonds.

E. Editorials

Category: ECONOMY

1. A threat to food security

Context:

The article talks about the challenges posed by the COVID-19 pandemic to food security.

Background:

  • The COVID-19 pandemic is putting an enormous strain on public health systems around the world. The large scale lockdowns and travel restrictions will entail economic and social hardships.

Details:

Food security for all:

  • Despite some reports of panic buying and shortage in supermarkets, as of now, COVID-19 has not entailed much strain on food security.
  • Though there is enough supply of food in the world to feed everyone, the world must prepare to face the enormous risk that food may not be made available where it is needed.
  • The present crisis posed by the pandemic could become all the more worse if there is a disruption of food supply chains leading to shortage of food for millions. This would contribute to the increasing number of fatalities.
  • A globally coordinated and coherent response is needed to prevent this public health crisis from triggering a food crisis in which people cannot find or afford food.

Concerns:

  • There are concerns that the pandemic and the measures in place to contain the spread of the coronavirus may lead to the disruption of food supply chains.

Backward linkage factors:

  • The closure of industries might lead to the shortage of fertilizers, veterinary medicines and other input, which could affect agricultural production.
  • Restrictions of movement may impede farmers from farming.
  • The non availability of labour might also affect the farmers in developing countries which are still reliant on labour for farming activities like sowing, harvesting and weeding operations.
  • The disruptions in the supply chains could affect the availability of quality seeds for the farmers.

Forward linkage factors:

  • The closures and lockdowns have created logistical bottlenecks that affect the long value chains of the modern global economy.
  • Restrictions of movement and closure of industries may impede food processing industries, which handle a large share of the agricultural products.
  • The closures of restaurants and grocery shops and supermarkets operating at less than optimal levels may diminish demand for fresh produce and fisheries products.
  • This reduced demand will affect both producers and suppliers given the fact that perishables like fruits, vegetables and animal products do not have long shelf lives. The lack of sufficient and quality warehousing facility will only exacerbate the crisis.
    • The Rabi season’s wheat procurement has been delayed in states like Punjab and Haryana due to Covid-19. Labour shortage and lack of adequate transportation are set to hit the process. The lack of quality storage facilities has raised the fears of spoilage of the produce.

Long term impact on food security:

  • The reduced demand and reduced prices and subsequently the reduced income would be especially severe on smallholder farmers.
  • The retreat of these smallholder farmers from farming would have long-term consequences for the world’s increasingly urbanized population and its food security.

Threat of wrong policy decisions:

  • Uncertainty about food availability can induce policymakers to implement trade restrictive measures in order to safeguard national food security.
  • During the 2007-2008 global food price crisis, export restrictions were put in place by exporting countries to increase food availability domestically.
    • This led to serious disruptions in the world food market, resulting in price spikes and increased price volatility.
    • The measures proved extremely damaging, especially for low-income food-deficit countries and to the efforts of humanitarian organizations to procure supplies for the needy and vulnerable.
    • The restrictions only exacerbated the situation.
  • There is the need to guard against such hasty policy decisions.

Exacerbate the suffering of the poor:

  • The poorest countries face severe nutritional challenges.
    • There are 113 million people experiencing acute hunger in the world.
    • In sub-Saharan Africa, a quarter of the population is undernourished.
  • Any disruptions to food supply chains will intensify both human suffering and the challenge of reducing hunger around the world.
  • Any food crisis as a result of poor policymaking will lead to a humanitarian disaster.

Way forward:

  • The global community must take immediate actions to minimize disruptions to food supply chains.

Global approach:

  • Policymakers must avoid tightening food supply conditions.
  • Though every country faces its own challenges, collaboration between governments and the other sectors and stakeholders is very important.
  • The global problem requires a global response to be dealt with. Global markets are critical for smoothening supply and demand shocks across countries and regions.

Credible information:

  • To maintain the proper functioning of the food markets, there is a need to ensure that information on prices, production, consumption and stocks of food is available to all stakeholders in real time.
  • This approach will reduce uncertainty and allow producers, consumers, traders and processors to make informed decisions and to contain unwarranted panic behaviour in global food markets.

Government’s role:

  • Given the vulnerability of the poor, the government must take responsibility to ensure food security to the poor and needy during this period.
  • The government must also support the farmers, especially the small and marginal farmers to ensure sufficient resources are available for them to carry on their farming.
  • The government should collaborate with relevant stakeholders and sectors to ensure that disruptions of food supply chains are minimized as much as possible.

Category: SOCIAL ISSUES

1. Short end of the stick

Context:

  • Hardship faced by the migrant labourers in the light of the lockdown.

Background:

  • The lockdown measures have been in place to slow down the spread of SARS-CoV-2. The measures taken to address the public health challenge have also led to a humanitarian crisis for many among the poorer segments of India’s urban population.
  • The most affected section due to the lockdown has been the inter-State migrant worker community.
  • Thousands of these migrant labourers have been leaving cities, even on foot, for their towns in Uttar Pradesh, Madhya Pradesh, Bihar and elsewhere.

Details:

Vulnerability of the migrant workers:

Livelihood opportunities:

  • The migrant workers are largely dependent upon casual and daily wage labour and unorganized retail.
  • The lockdown would severely affect their livelihood opportunities.
  • Citing the uncertainty of employment, and therefore of money and resources, these migrant labourers sought the comfort of the social net in their towns and wanted to return back.

Lifestyle:

  • Most of the migrant workers live in cramped spaces where it would be difficult to maintain physical distancing.
  • The lack of hygiene and sanitation facilities makes this section highly vulnerable to such epidemics.

Primary breadwinners:

  • An analysis of the migration trend shows that a major portion of the rural-urban migration constitutes the migration of men to cities in search of better employment opportunities.
  • They are generally the primary breadwinners, and the survival of their families back home is entirely dependent on these migrant labourers. The anxiety of being affected by the virus drove many to return to their families.

Criticism of government policy:

Short notice:

  • The Central government announced the lockdown with just a four-hour notice, making it even harder for the migrant labourers to figure out ways to face the challenge of a lockdown.

Lack of understanding:

  • The lockdown has a disproportionate impact on the socioeconomic conditions of the poor and unorganized sector.
  • The lack of social security among the poor makes it difficult for them to practise social distancing. They are mostly dependent upon daily and even hourly wage earnings. The lockdown would lead to an income security challenge to them.

Lack of planning:

  • There have been suggestions that given the prior warnings of COVID-19, the situation could have been handled much better. There have been concerns that the decision was arbitrary, unplanned and ill-prepared.
  • The lockdown was not accompanied by practical and necessary relief measures.

Lack of support from government:

  • The movement of the labourers towards their hometowns was not aided by the government.
  • There have been some sections which have argued that if the government was willing to evacuate Indians from other countries, why similar intent is not being shown to make sure that the poor migrant labourers reach their hometown.

Counter arguments:

  • The need for a very short notice before lockdown was considered essential given the fact that a larger time lag would lead to large scale movement of people and make it difficult to contain the spread of the epidemic.
  • The decision for a lockdown at the earliest was considered necessary given the examples of other countries like Italy and Spain where a delay in lockdown had substantially increased the number of cases. The intention was to announce the lockdown and then taken necessary actions for easing the pressure on the citizenry.
  • The first priority during such a crisis has to be tackling the health challenge, which can be followed by other measures. The economic package by the government in the form of the Garib Kalyan Yojana was directed at easing the pressure on the vulnerable.
  • Given the daunting scale of tracking that would be required if the migration was allowed, the government chose not to allow migration of the labourers to their hometowns. The possible spread of the virus in the rural hinterlands would be beyond the carrying capacity of the Indian health system.

Steps being taken:

  • The Union Home Ministry has directed State and Union Territory governments to enforce the lockdown strictly and prevent migrants from leaving cities.
  • The Ministry of Home Affairs (MHA) has issued orders to stop the home-bound and quarantine them for 14 days.
  • It has issued notices to States to open highway relief camps with essentials for the stranded poor, while observing physical distancing norms.

For more on this, click on the below link:

CNA dated March 30, 2020

Way forward:

For the stranded migrants:

  • The proposed quarantine camps must be well equipped with sufficient supplies of essential items for all.
  • Governments must use schools and college hostels for the migrants to stay and also utilize the Public Distribution System to provide food.
  • Governments must show resolve, commitment, and compassion to deal with the migrant crisis.
  • Civil society must come forward and support the most vulnerable.

For the migrant’s en route to their hometowns:

  • For the migrants already en route to their places, there should be proper screening en route and they should be informed of the practical health protocols to be practiced during the first 14 days.
  • These migrants need to be put under observation, further screening, isolation, testing, and quarantine where required.
  • The affected families also have to be given minimum guarantees of food, health, and some income by the government during the lockdown.

F. Prelims Facts

1. MCA to waive firms’ late filing charges

What’s in News?

To provide respite to companies and Limited Liability Partnerships (LLPs) in the wake of COVID-19, the Ministry of Corporate Affairs has introduced the ‘Companies Fresh Start Scheme, 2020’ and revised the ‘LLP Settlement Scheme, 2020’.

  • They both allow for a one-time waiver of additional filing fees for delayed filings by companies or LLPs with the Registrar of Companies between April 1 and September 30, 2020.
  • The schemes significantly reduce the related financial burden on these entities, especially for those with long-standing defaults, thereby allowing them a fresh start.

2. A novel air purifier to disinfect hospitals in COVID-19 fight

What’s in News?

The Department of Science and Technology (DST) has said that an air purifying technology developed by an incubatee company of the Pune-based Science and Technology Park (STP or Scitech Park) could offer an effective solution to the country’s fight against the COVID-19 pandemic by reducing the viral load in the infected areas.

  • The technology has been developed under the NIDHI PRAYAS program initiated by the DST.

This topic has been covered in 30th March 2020 PIB Summary and Analysis. Click here to read.

G. Tidbits

1. Rabi harvest to be affected for want of farm workers

What’s in News?

The lakhs of migrant workers streaming to their home villages due to the COVID-19 pandemic and the subsequent lockdown have left many farmers across the country bereft of agricultural labour just before the crucial harvesting season of the rabi or winter crop.

  • Wheat, mustard, rabi paddy, maize, chickpeas and soyabean are amongst the major crops harvested during this season.

Issues:

  • If the harvesting is postponed beyond 7 or 8 days, the grain would shatter.
  • Farmers also worry about government procurement and their ability to sell their crops, given that many mandis or agricultural markets are closed, despite fresh Home Ministry orders to exempt all such farming activities from the shutdown.
  • Many of the mechanical combine harvesters owned by Punjab and Haryana farmers are also stuck in Madhya Pradesh, Maharashtra and Gujarat, which harvest their wheat earlier than the northern States.

Relief on crop loans:

  • The Centre has offered some relief on crop loans up to ₹3 lakh which are due for repayment between March and May 2020, by deciding to extend 2% interest subvention to banks and 3% prompt repayment incentive to all farmers up to May 31, 2020.

2. SEBI relaxes debt default norms, raters can go easy

What’s in News?

The Securities and Exchange Board of India (SEBI) has temporarily relaxed the norms related to debt default on account of the ongoing COVID-19 lockdown and the moratorium permitted by the Reserve Bank of India (RBI).

  • The capital markets regulator has said that if a default takes place solely due to the lockdown or the moratorium, then credit rating agencies (CRAs) need not recognise it as default.
  • This would also be applicable on any rescheduling in payment of debt obligation done by the issuer, prior to the due date, with the approval of the investors/lenders and the relaxation will be extended till the period of the RBI moratorium.

H. UPSC Prelims Practice Questions

Q1. Kawal Tiger Reserve (KTR) is situated in:
  1. Andhra Pradesh
  2. Tamil Nadu
  3. Telangana
  4. Madhya Pradesh
See
Answer
Q2. Consider the following statements with respect to the Prime Minister's National 
Relief Fund (PMNRF):
  1. The fund assists partially, to defray the expenses for medical treatment like heart surgery, kidney transplantation, cancer treatment of needy people.
  2. All contributions towards PMNRF are exempt from Income Tax under Section 80(G).
  3. PMNRF does not receive any budgetary support.

Which of the given statement/s is/are incorrect?

  1. 1 only
  2. 1 and 2 only
  3. 3 only
  4. None of the above
See
Answer
Q3. Consider the following statements with respect to “Sodium hypochlorite”:
  1. It is commonly used as a bleaching agent or disinfectant.
  2. Sodium hypochlorite is corrosive.
  3. It is industrially synthesized by the Hooker process.

Which of the given statement/s is/are correct?

  1. 1 only
  2. 1 and 3 only
  3. 1 and 2 only
  4. 1, 2 and 3
See
Answer
Q4. Which of the following are the tributaries of River Cauvery?
  1. Kabini
  2. Hemavati
  3. Koyna
  4. Musi
  5. Shimsha

Choose the correct option:

  1. 1, 2 and 5 only
  2. 1, 2, 4 and 5 only
  3. 1, 2, 3 and 4 only
  4. 2, 3, 4 and 5 only
See
Answer

I. UPSC Mains Practice Questions

  1. There are concerns that the pandemic and the measures in place to contain its spread may pose a significant challenge in ensuring food security for all. Analyze. Suggest the measures needed to overcome this challenge. (10 marks,150 words)
  2. The COVID-19 pandemic and the lockdown measures have a disproportionate impact on the socioeconomic conditions of the migrant labourers given their vulnerabilities. Comment. In the light of the current migrant crisis, discuss the necessary steps to be taken, balancing the needs of public health and vulnerability of the poor. (15 marks,250 words)
  3. Case Study:

In the light of the announcement of the national lockdown to limit the spread of COVID-19, thousands of migrant labourers have been leaving cities, to move towards their towns in the neighbouring states.

You are in charge of a district and mandated to enforce the lockdown strictly and prevent migrants from leaving the city limits.

Thousands of people, driven by anxiety and fear have reached the spot being guarded by your team. Most of these appear tired and weak having walked long distances to reach the place. There are a substantial number of women and children among the people at the border.

The migrants are reasoning with you to let them cross the city limits. They reason out that they have no work and would not be able to sustain themselves in the city and would die of hunger even if they were forced to stay on.

The police force available at the spot is limited compared to the large number of migrant labourers. The migrants are seething with anger against the lack of transport facilities and government support. There is the increasing threat of violence against the government personnel.

Recently, in a similar situation, a district in-charge who had facilitated the movement of migrant labourers was suspended for dereliction of duties.

In such trying circumstances, what will be your response? Examine the qualities of a public servant which will be required to manage such situations.

Read the previous CNA here.

31 March 2020 CNA:- Download PDF Here

 

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